What Trump doesn’t understand about black unemployment

The unemployment rate for blacks nationally dropped to 6.8% in December, the lowest since government record keeping began in 1972. (M. Spencer Green / Associated Press)

In his maiden State of the Union address and earlier comments, President Trump has crowed about black unemployment falling to the lowest level on record. And many analysts credit tax cuts, deregulation and other policies with bolstering the economy.

But what Trump does not mention is that well before he took office, joblessness had been falling steadily for all groups, not just blacks. Moreover, the historically low black unemployment rate that Trump boasted of was a relatively high 6.8% — and, as it turns out, short-lived.

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On Friday, the Labor Department said that African American unemployment in January went up to 7.7%, while the rate for all workers remained at 4.1%. Latino unemployment was 5% last month.

Jobless figures for black Americans and other groups can be volatile from month to month, so economists are careful about reading too much into any single month's data. But even if the 6.8% unemployment rate for blacks in December had held, that still would have been roughly double the comparable jobless figure for white Americans.

"I would dare say, if we were talking about national or white unemployment at 6.8%, it would not be cause for celebration," said Valerie Wilson, an economist at the Economic Policy Institute, a liberal think tank.

Truth is, she said, the economic condition of black families, while having improved in recent years as it has for most Americans, is far from good. On measures of labor, education, health and income, their standing remains well below that of white Americans, and in some cases, the gap has been widening.

Researchers at the University of Chicago, for example, found that the difference in median earnings between blacks and whites has followed an uneven path — showing both gains and significant reversals.

During the years from 1940 to the mid-1970s, the income gap shrank. Then the positive trend reversed, and by 2014, the difference between black and white earnings had grown as large as it was in 1950.

That narrowed a bit in 2016 as black households saw a sharp 5.7% jump in median household income, the largest of any racial group, to $39,490, according to the Census Bureau.

The median household income for white households was $61,858 in 2016, climbing enough to surpass the previous inflation-adjusted record in 2000. Black incomes are still 5% shy of the previous high of $41,363 in 2000.

Still, on the plus side, more African Americans are now working year-round in full-time jobs. And if U.S. economic growth picks up and overall unemployment, now at about 4%, drops further as expected, black workers stand to benefit — as do Latinos, less-educated workers and others who are disadvantaged in the job market.

What happens to black unemployment from now on will be something Trump can more justifiably take credit for, or face blame.

If the president succeeds in returning manufacturing to its glory days, as he has often promised, or pushing through a proposed $1.5-trillion infrastructure investment package, that could certainly open up more opportunities, especially for African American men, whose high unemployment rates have been traced at least partly to the loss of blue-collar and unionized jobs in America. Black workers remain well represented in construction and manufacturing industries.

It is far from certain, however, that Congress will seriously consider the kind of big infrastructure program that Trump wants, sketchy as the details are at the moment.

And even if the president's policies help strengthen domestic manufacturing — and there are skeptics who think Trump could take the U.S. into a costly trade war — new factories today generally require far fewer workers than in times past. The new jobs also typically demand more skills and training.

The longer-term outlook may be even more tenuous. Any potential strides that can be made from an industrial or economic resurgence, analysts say, could well be undermined by what many see as inevitable government spending cuts as a result of surging deficits and higher costs for current programs.

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Trump sold the $1.5-trillion Republican tax-cut plan as a boon to ordinary workers, but the biggest beneficiaries are corporations and wealthy Americans, where blacks are underrepresented. Just 2.8% of all African American households had annual incomes of $200,000 or more in 2016, compared with 8.1% for whites and 3.4% for Latinos.

The GOP tax overhaul is projected to help Americans in almost all groups initially, but those benefits turn into tax increases within a few years for taxpayers in lower-income brackets. More than individual tax bills, experts fear that government agencies — federal as well as state and local — will have to make sharp budget reductions in programs that support public education and social welfare — cuts that almost certainly will disproportionately hurt black families and other minorities.

Though the Trump administration has argued that the tax cuts will largely pay for themselves through stronger economic growth and thus more tax revenues, the consensus among experts is that they will add around $1 trillion to the federal debt over 10 years, likely forcing Congress to make some hard decisions in the future about where to make discretionary spending cuts.

Some congressional Republicans have talked about pulling back on things such as food stamps, which many more black and white Americans alike have come to lean on in the last decade. One out of 10 white households reported getting food stamps in 2016, but it was 1 out of 4 for black households.

The new tax law eliminated the Affordable Care Act's individual mandate, likely resulting in a higher percentage of people going without health insurance — an important indicator of economic well-being. Thanks largely to the ACA, the share of black Americans without health insurance was down to 9.7% in 2016, from 18.1% in 2009 — a much bigger drop than for white Americans, 7.7% of whom went without medical coverage in 2016.

Policy analysts are particularly concerned about the threat of cutbacks in federal and state funding for education and training, which are key to economic mobility and securing the skills needed for higher-paying jobs.

"When you look at these unemployment gaps and these earnings gaps, blacks have to have more education to make the same amount of money or get the same unemployment rate of whites who are less educated," said William Spriggs, chief economist at the AFL-CIO.

When it comes to high school graduation rates, African Americans have sharply narrowed the gap with whites over the years, with 87.1% of all blacks having completed at least a high school education in 2016, compared with 89.5% for whites. Twenty years ago, that gap was almost 10 percentage points.

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But the biggest income premiums come with four-year college degrees, and here, black Americans have barely made a dent in the big higher-education racial divide that has existed for decades. And the gap has actually widened for the current cohort of young adults, blacks and whites who are 25 to 29 years old — with 37% of whites and 23.3% of blacks having at least a college degree, according to census figures.

"For now, labor markets are tight, and that's a good thing," said Harry Holzer, an economist and public policy professor at Georgetown University. But then, he said, the question is, "When the demand is there, what are we doing to create the supply, the greater supply of workers with appropriate skills?"

In recent years, more companies have partnered with community colleges and vocational schools for apprenticeships and other programs to develop advanced skills for jobs, but it remains to be seen whether public funds will continue to be there to support them.

Kim Rueben, a senior fellow at the Tax Policy Center who specializes in education, said one of the biggest targets in discretionary budget cuts will be the federal Pell grant — a $22.5-billion annual subsidy provided to higher education students that has disproportionately benefited minorities and helped boost attendance at community colleges and other schools.

States also could begin to raise public university tuitions, thanks to federal tax changes that limit deductions for state and local income taxes to $10,000. Before, this deduction was uncapped and so dampened the effect of high state and local taxes, which in turn had the result of subsidizing expenditures in high-tax states such as California.

"It could definitely have an impact on this population" of black Americans and college attendance, Rueben said.